Our premium rates can be up to 30% lower!

6 September 2006

Editor
Forum Page
Straits Times

I refer to the article by your senior correspondent, Christopher Tan, "No. 1 car insurer risks being overtaken", (ST, 1 Sep).

Christopher Tan's article has not given a fair and complete description of the changes in the motor insurance market during the past year. He has also failed to present the relevant points in our reply to him. I wish to ask for my points to be printed.

There were two significant changes in the car market during the past year.

There was a large increase in the purchase of new cars, due to the drop in COE (Certificate of Entitlement) prices. A total of 61,069 new private cars were sold during the past six months, representing an increase of about 12 per cent over the previous period.

Many car distributors made it compulsory for the motor insurance to be placed with their tied insurance company. It is offered as a package with the sale of the new car. The owner is not given a choice of selecting their insurer. The distributor jacks up the cost of the car to include the cost of insurance.

Previously, most distributors gave the choice to their customers to choose their insurer, but offered a large discount if they select their tied insurer. Now, this choice has been taken away.

Many long-standing customers of NTUC Income were forced to take the insurance with the tied insurer when they buy a new car. They were not even told about the premium rate for the insurance.

These two changes account for a large proportion of our temporary drop in market share.

I believe that this practice is anti-competition. I will let CASE or the relevant authority consider if it contravenes the new Competition Act.

I encourage the owners of the new cars to shop around for the premium rate when their insurance policy comes up for renewal during the second and subsequent years.

From our market study, the premium rate charged by the tied insurers could be up to 30 per cent higher than premium rate charged by NTUC Income. The actual difference may vary according to the model of vehicle and to competitive forces.

NTUC Income will be advertising our competitive premium rates for most popular models of cars. We hope to set a benchmark for the benefit of the consumers.

The report stated that we were not able to retain our customers. This is incorrect. Our renewal rate has been consistently above 75 per cent which is one of the highest in the industry.


Tan Kin Lian
Chief Executive Officer
NTUC Income